Newsroom

Previous Story

Next Story

Management shake-up; MGM’s CFO departs as part of the company’s cost-cutting efforts

Howard Stutz, CDC Gaming Reports · February 21, 2019 at 6:24 pm

MGM Resorts International announced Thursday that Chief Financial Officer Dan D’Arrigo was resigning from the casino giant, saying the long-time executive was taking advantage of a voluntary resignation program offered through the company’s MGM 2020 cost cutting effort.

D’Arrigo, who has been with MGM Resorts for more than two decades, will remain with the company over the next month in an advisory role. During his tenure with MGM, D’Arrigo oversaw billions of dollars in capital market transactions that covered the company’s growth efforts, including the multi-billion-dollar acquisitions of Mirage Resorts and Mandalay Resort Group and the development of CityCenter on the Las Vegas Strip.

MGM 2020, formally announced in January, calls for a range of company-wide cost-cutting and efficiency measures, including $100 million in reduced labor costs. MGM executives said the plans would lead to an additional $300 million in cash flow by 2021.

D’Arrigo’s departure was the first major management change associated with the cost-reduction effort.

Current MGM Chief Operating Officer Corey Sanders will be appointed CFO and will lead the strategic financial transformation that is part of MGM 2020. Bill Hornbuckle will expand his current role with MGM Resorts and be appointed chief operating officer, in addition to his current role as President.

“Given Dan’s decision, we took the opportunity to thoughtfully examine our leadership roles,” MGM Chairman and CEO Jim Murren said in a statement. “Dan has shown great leadership and is leaving us with an exemplary set of professionals who will support Corey in his new role. Dan’s contributions to our organization have been invaluable.”

The news was announced after the stock markets closed Thursday. Shares of MGM closed at $28.35 on the New York Stock Exchange, down 46 cents or 1.6 percent.

Deutsche Bank gaming analyst Carlo Santarelli told investors late Thursday that the departure of D’Arrigo came “as a surprise” and will “create a wide variety reach of reactions as it pertains to the implications for the company.” While the departure was voluntary, Santarelli said the change “speaks to the times, which we believe are, and are likely to remain, for the near to medium term, challenging.”

Murren said the changes to the company’s leadership team and a streamlining of responsibilities will help drive the strategic direction of MGM 2020 initiative.

MGM also established an ad-hoc board committee that is evaluating the company’s real estate portfolio.

“The goal is to unlock long-term value for our shareholders,” Murren said during last week’s fourth quarter earnings conference call. “We, as a company, have some of the best real estate in the U.S., and we need to put a greater focus on that value. It’s exciting, but it’s complicated and we have to make sure we get it right.”

The committee includes Keith Meister, managing partner of activist hedge fund Corvex Management, who was appointed to the MGM board in January after Corvex acquired 3 percent of MGM.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.